Local Landlords Question New Circuit Breaker Proposal

April 12, 2007|WSBT-TV Report

Some Indiana landlords say proposed changes to the state's new circuit breaker law could put them out of business. Right now, the circuit breaker caps both residential and commercial property taxes at 2 percent. But under a new bill passed overwhelmingly by State Senators Wednesday night, commercial property owners including some landlords would pay 3 percent. South Bend landlord Sharone Smith has had plenty of up and down years. But never like this year. "We're breaking even," she said. "They don't even have the money to maintain the houses anymore, so they're holding on until the 2 percent circuit breaker goes into effect." But there are new questions about if that will actually happen. Under a bill opposed by only 5 of 49 voting state senators, landlords with more than 4 units and most commercial businesses would be capped at 3 percent. Sharone says that move would be devastating. "It has to go to 2 percent for housing providers," she said. "If we don't have that, you're going to see more vacant properties. I've talked to many landlords, and they're just gonna give up." But lawmakers caution the percentage hike is far from a done deal. "Once you go into conference committee, you start all over again in a sense," Indiana House Speaker B. Patrick Bauer told WSBT. "So just because it's in there now doesn't mean it'll stay in there!" Still, some say the change is too important to abandon altogether. South Bend Mayor Steve Luecke says while he would like to see landlords taxed at the lower rate, another proposal attached to the bill that would allow counties to use local income taxes instead of property taxes is too important to lose. "It would reduce the amount of revenue that would be lost here in St. Joseph County," he said. "This is certainly much better than we were before." Still, local leaders remain cautious, because the bill likely won't offset all of the projected 70 million dollars the county stands to lose over the next 4 years. Even so, Speaker Bauer is optimistic. "I think there's a good chance for some progress," he said. Local landlords are not. "There's no hope for them. Absolutely no hope," said Smith. Speaker Bauer says he'll push for a compromise bill and a final vote in both houses before the general assembly's spring session ends in two weeks. He believes there is support from both sides of the political aisle for relief to counties affected by the circuit breaker law. Local schools who also rely heavily on property taxes wouldn't notice any immediate changes under the bill because the state would assume all school operating costs, matching the funds dollar for dollar through income tax. But Speaker Bauer cautions those details are likely to change during next week's House-Senate conference committee hearings.